Tourism Boards Increasingly Worried About Politicians and Budget Cuts

Dan Peltier, Skift

- Jul 18, 2017 1:00 am

Skift Take

While tourism board funding has been a mixed bag around the world in recent years, it’s evident tourism boards aren’t losing focus on strategies like video and more deeply engaging with the local community.

— Dan Peltier

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While both sparsely and highly funded tourism boards have seen their coffers grow over the past three years, there’s a general consensus that their budgets face threats from politicians, particularly in the United States.

That’s based on a survey from Destinations International (formerly Destination Marketing Associations International), which surveyed 433 tourism board executives in 52 countries online in April 2017 about their outlook on funding, strategy and other trends playing out in the travel industry.

About 200 respondents (nearly 50 percent) were from U.S. tourism boards, the largest country represented in the survey. The survey was an update to the association’s 2014 survey on the same topics.

Respondents were asked to indicate their organization’s funding level in one of five categories (see chart below). The less than $1 million and $5 million to $20 million categories received the highest percentage of respondents (both 27 percent) and were also two of the categories with the most growth (12.5 percent and eight percent growth from 2014 to 2017, respectively).

Some 20 percent said their budgets were between $2 million to $5 million and 10 percent said they have more than $20 million in funding.

When asked to rank the level of influence and importance on funding issues such as “hotel taxes increasingly vulnerable to alternative politically based projects” and “governments facing pressure to reduce or eliminate direct financial subsidies to the tourism sector,” U.S. respondents said that those issues had “high” levels of influence on their day-to-day operations.

Global Tourism Board Budgets Range 2017 vs. 2014

Funding Level

2014

2017

% Change 2014/2017

Less than $1 million

24%

27%

12.50%

$1 million to $2 million

20%

16%

-20%

$2 million to $5 million

23%

20%

-13%

$5 million to $20 million

25%

27%

8%

More than $20 million

8%

10%

25%

Source: Destinations International

Many tourism boards are quasi-governmental organizations and accountable to elected officials for their performance on attracting visitors and supporting economic development – two big carrots often used as incentives during budget negotiations. During Visit Florida’s recent budget battle, for example, the organization’s economic development programs were one of the most popular arguments made for saving its funding.

Fewer respondents said their structure was as a government organization in 2017 than they indicated in 2014 (15 percent versus 18 percent, respectively). (See chart below).

On a scale of one to 10, respondents said the economic impact of tourism was “1” and other metrics such as “social media metrics” and “media stories” ranked an average of six to 11 across regions when asked “what will your organization’s expected measure of success be five to 10 years from now?”

Social media and mobile platforms ranked among the top 25 trends most relevant to respondents in 2017 while trends such as geotargeting, personalization and living like a local ranked lower on that list.

While funding resources are clearly a concern for many tourism boards around the world and particularly in the U.S., funding and economic development and impact don’t appear to be the most pressing trends or priorities when weighed against dozens of others that tourism boards must address this year and in the future.

But with governments across the U.S. and Europe looking to make massive budget cuts this year due to a narrow populism and other factors spreading across those regions, such as U.S. President Donald Trump’s proposed elimination of Brand USA, tourism boards – regardless of location – are always concerned about governmental relations and where their next budget approval process is coming from.

Business Model of Tourism Board 2017 vs. 2014

Business Model of Organization

2014

2017

% Change 2014/2017

Non-profit organization, with membership

42%

41%

-2.30%

Non-profit organization, with no membership

25%

23%

-8%

Government organization

18%

15%

-16.60%

Public/private partnership

8%

7%

-12.50%

Public authority

3%

4%

33.30%

Other

N/A

9%

9%

Chamber of commerce

4%

1%

-75%

Source: Destinations International

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